Property tax bill analysis should start the talks

Saturday, October 6, 2012

A new office created to assess the economic viability of proposed legislation has found that bills to eliminate the local school property tax and replace it with increases in the state personal income and sales taxes would not generate enough revenue.

The Independent Fiscal Office reported that the proposal would produce $1.5 billion less than the $13.5 billion that the state’s 500 school districts would lose through elimination of the property tax.

That finding should be the beginning, rather the end of the effort to free local school districts and local property owners from the chains of the property tax. Benefits from eliminating the tax would be vast, extending well beyond school districts alone.

Eliminating local school property taxes by itself would eliminate one of the longest-standing obstacles to effective public education in Pennsylvania: vast disparities in the tax bases of affluent and needy school districts that help to ensure widely disparate educational quality.

The only way to ensure that students statewide have comparable access to resources is to establish a statewide tax base for educational funding.

Establishing state-based funding for schools and eliminating the school property tax also would help to halt the rapid decline of municipal governments across Pennsylvania.

Municipal governments also are heavily dependent on property taxes but schools everywhere in the state consume much more of the local property tax pie than do municipal governments.

If lawmakers were to replace the school property tax with state funding, municipal governments would be able to raise property taxes without crushing local taxpayers. Even a significant municipal property tax increase still would result in an aggregate tax decrease for property owners no longer saddled with the school property tax.

The Independent Fiscal Office analysis was of the specific bills, not of the concept. Lawmakers could ensure enough revenue to cover school funding by reforming an array of state taxes, eliminating special interest exemptions and vastly spreading the tax burden.